5 comments:

Anonymous
said...

How did you arrive at the recovery estimates? They seem wildly optimistic to me. Reminds me of president Bush saying the other day that he believes that the fundamentals of the economy are sound, he 'really does'. You can be pretty sure that if Dubya says so, it isn't true. There are some real problems with the US industry and agriculture, dollar or no dollar.

The first (as far as I know) bank that serves 'regular' individual customers, IndyMac, has failed. This makes me think it is going to be either the quick or the intermediate option, and we should see soon enough how fast others follow IndyMac. Of course, if Freddie and Fannie go, it's game over right there.

You're right, they are optimistic. One problem is that I didn't define "recovery" very well. Recovery in this sense means that *some* measure of stability has returned to the economy, not that everything is back to normal. And I based these numbers on rough averages of historical hyperinflation episodes.

I also have reason for real optimism: We are in a period of incredible and accelerating technological change. That alone will help pump value back into the economy. Doesn't mean it will be easy, but I do believe we will make it through all this mess and rise again, perhaps better than before.

Yes, I'm also very optimistic about some of the technological advances. I'm quite sure that the energy problems will be solved, and solved surprisingly quickly, at least as far as electricity is concerned. There are very large improvements in efficiency to be made. Transportation fuels seem to be more of a problem, but it might turn out to be possible to cover at least a large part of the present consumption from sustainable biomass that is not food and does not compete for arable land.

Another thing is that this would be the first time an advanced economy goes through hyperinflation and has ubiquituous internet access during the crisis. I'm guessing that the net will allow forms of local organizing and trading that were not possible in the past crises. It might make it easier to use local currencies temporarily and bypass the dollar, even if doing that is technically illegal.

Yes, I know about polywell. If the fusion bit works - and I hope it does -, there are still some engineering challenges in making a power plant using it. Bussard's idea was to extract electricity directly from the fusor and not use steam turbines and generators at all. The efficiency would be phenomenal, but this has never been done before and will require some technical hurdles to be passed. (Of course, it's still possible to use steam/generators, if the direct way cannot be worked out.) Even in the best case, we probably won't see any energy from it until well after whichever 'hyperinflation scenario' turns out to be correct.

Anyways, I think the electricity problem is solvable even without fusion.